HomeMy WebLinkAboutSA Resolution 2013-03 (Investment Policy)I•It it I L01 0 11! LOW41
A RESOLUTION OF THE SAN RAFAEL SUCCESSOR AGENCY TO UPDATE
THE INVESTMENT POLICY.
WHEREAS, the San Rafael Successor Agency takes seriously its stewardship of the
Successor Agency's public resources and Successor Agency's current cash management
practices; and
WHEREAS, the Successor Agency's investment policy requires consideration or approval of
the investment policy annually; and
WHEREAS, all funds are invested in accordance with the investment policy and applicable
sections of the California Government Code; and
WHEREAS, the investment policy is intended to provide a long-term strategy for prudent
care of the Successor Agency's cash.
NOW, THEREFORE, BE IT RESOLVED that the San Rafael Successor Agency hereby
adopts the updated Investment Policy that is attached hereto as Exhibit A.
1, ESTHER C. BEIRNE, Clerk of the City Council, acting as Governing Board of the
Successor Agency, hereby certify that the foregoing resolution was duly and regularly introduced
and adopted at a regular meeting of the City Council, acting as Governing Board of the
Successor Agency held on Monday, the 3rd day of June, 2013, by the following vote, to wit:
AYES: MEMBERS: Colin, Connolly, Heller, McCullough & Chairman Phillips
NOES: MEMBERS: None
ESTHER C. BEIRNE, City Clerk
Investment Policy
For The San Rafael Successor Agency
CONSIDERED June 3, 2013
The San Rafael Successor Agency ("Agency") has adopted this Investment Policy in order
to establish the investment scope, objectives, delegation of authority, standards of
prudence, reporting requirements, internal controls, eligible investments and transactions,
diversification requirements, risk tolerance, and safekeeping and custodial procedures for
the investment of the Agency. All such funds will be invested in accordance with this Policy
and with applicable sections of the California Government Code. This Policy was endorsed
and approved by the Agency on the date noted above. It replaces any previous investment
policy or investment procedures of the Agency.
SCOPE
It is intended that this Policy cover all short-term operating funds and investment activities of
the Agency. These funds are accounted for in the annual audit report, and may include:
• General Fund
• Special Revenue Funds
• Debt Service Funds
• Capital Projects Funds
• Fiduciary Funds
Additional funds that may be created from time to time shall be administered in accordance
with the provisions of this Policy.
All cash shall be pooled for investment purposes. The investment income derived from the
pooled investment account shall be allocated to the contributing funds based upon the
proportion of the respective average balances relative to the total pooled balance in the
investment portfolio. Investment income shall be distributed to the individual funds not less
than annually.
OBJECTIVES
The Agency's funds shall be invested in compliance with all applicable City Municipal
Codes, California State statutes, and Federal regulations, and in a manner designed to
accomplish the following objectives, which are listed in priority order:
1. Preservation of capital and protection of investment principal.
2. Maintenance of sufficient liquidity to meet anticipated cash flows.
3. Attainment of a market value rate of return.
4. Diversification to avoid incurring unreasonable market risks.
EXHIBIT A
am
The San Rafael Successor Agency
Investment Policy
JUO8 3, 2013
DELEGATION OF AUTHORITY
The rD@DageDl8Dt responsibilityfor the investment prOg[8D1 is delegated @ODU8Jk/
by City Treasurer pursuant to California Government Code Section 53607. The Treasurer
may delegate the authority to conduct investment transactions and to manage the operation
of the investment portfolio to other specifically authorized staff members. The Treasurer
shall maintain a list of persons authorized to transact securities business for the Agency.
No person may engage in an investment transaction except as expressly provided under
the terms of this Policy.
The City Manager and the Treasurer jointly shall develop written administrative procedures
and iOteFO@| controls, CODSiSteOt with this Policy, for the operation Of the AoeOovS
investment program. Such procedures shall be designed to prevent |oaeee ofpublic funds
arising from fr@ud, employee error, misrepresentation by third partiee, or imprudent actions
by employees of the Agency.
The Agency may engage the support services ofoutside investment advisors inregard toits
investment program, so long as it can be clearly demonstrated that these services produce
a net financial advantage or necessary financial protection of the Agency's financial
resources.
The standard of prudence to be used for managing the Agency's investments shall be
California Government Code Section 53000.3. the prudent investor standard which states,
"\80leO investing, neiOw8StiOg` purchasing, acquiring, exchanging, selling, or Dl8OGgiDg
public funde, a trustee shall ac[ with care, ehiU, prudence, and diligence under the
circumstances then pnevai|ing, ino|uding, but not limited to, the general economic conditions
and the anticipated needs of the egenoy, that m prudent person acting in o like capacity and
familiarity with those matters VVOU|d use in the conduct of funds Of 8 like Ch@[8Cte[ and with
like aims, to safeguard the principal and maintain the liquidity needs of the agency."
The Agency's overall investment program shall be designed and managed with adegree of
prOfeSSiODa|iSnn that is worthy of the public trust. The Agency recognizes that OO
investment is totally without risk and that the investment activities of the Agency are 8
matter Of public record. ACCDndiDg|y. the Agency recognizes that 0CC8SiOO8| measured
|O8Ges may be desirable in 8diVenSified portfolio and shall be considered within the context
of the 0ve[8|| portfolio's nStU[O, provided that adequate diversification has been implemented
and that the sale of a security is in the best long-term interest of the Agency.
The Treasurer and authorized investment pe[GOnD8| acting in @Cc0rd3nCH with vv[kteD
procedures and exercising due diligence Sh@U be relieved of personal responsibility for 8D
individual security's credit risk O[market price ChQOgeS, provided that the deviations from
expectations are reported in Gtimely fashion to the City Manager and appropriate 8CtiOD is
taken tVcontrol adverse developments.
ETHICS AND CONFLICTS OF INTEREST
The San Rafael Successor Agency
Investment Policy
June 3.2013
Elected OffiCi8|S and employees involved in the investment process Sh8U refrain from
personal business activity that could conflict with proper execution Of the investment
p[Og[8[D or that COU|d impair or create the 8pp88[8OQe Of an impairment of their ability to
make impartial investment decisions. Employees and investment officials shall disclose to
the City Manager any business interests they have in financial institutions that conduct
business with the Agency and they shall subordinate their personal investment transactions
to those of the Agency. In addition, the City Manager and the l[reoounsr shall file e
Statement of Economic Interests each year pursuant to California Government Code
Section 87203 and regulations of the Fair Po|iUoo| Practices Commission.
AUTHORIZED SECURITIES AND TRANSACTIONS
All investments and deposits of the Agency ohoU be made in accordance with California
Government Code Sections 18428.1. 53800-53809 and 53630-53086. except that pursuant
to California Government Code Section 5903(e), proceeds of bonds and any moneys set
aside or pledged to secure payment of the bonds may be invested in securities or
obligations described in the ordinance, resolution, indenture, agreement, or other instrument
providing for the issuance ofthe bonds. Any revisions orextensions ofthese code sections
will be assumed to be part of this Policy immediately upon being enacted. However, in the
event that amendments [othese sections conflict with this Policy and Agency investment
prGctices, the Agency may delay adherence to the new requirements when itiodeemed in
the best interest ofthe Agency todoso. |nsuch instances, after consultation with the City's
attorney, the City Manager and the Treasurer will present a recommended course of action
to the City Council of the City of San Rafael acting as Successor Agency for approval.
The Agency has further restricted the eligible types ofsecurities and transactions eofollows:
1. United 8io1eGTneaeury bi||a, notes and bonds with a final maturity not exceeding five
years from the date oftrade settlement.
2. Federal 8qeDCy debentures and mortgage-backed securities with 3 final maturity not
exceeding five years from the date of trade settlement issued by the Government
National Mortgage Association (GNN1A).
3. Federal Instrumentalitv (government sponsored enterprise) debentures, discount notes,
callable and step-up securities, with GfiD@| nl8turhv not exceeding five years from the
date Of trade Sett|eDleDt, issued by the following Only: Federal Home L08O Banks
(FHLB), Federal National Mortgage AS8OCi8dOD (FNMA), Federal Farm Credit Banks
(FFCB) and Federal Home Loan Mortgage CO[pOr8UOD (FHLK8C). Federal
|DSt[uDleDt@[ity S8CUFiUes shall be rated at least AAA Orthe equivalent by G O8bOD8||y
recognized statistical -rating organization (NRSRO) at the time of purchase.
4. Medium Term Notes issued by corporations organized and operating within the United
States or by depository institutions |iCHDSed by the United States or any state and
operating within the United States, with a final maturity not exceeding five years from the
date of trade Sett|e[DeOi. and rated at least A or the equivalent by 8 NRSR[]. No more
than $1.000.000 shall be invested in n08diU0 term notes of any one iSSUB[. and the
The San Rafael Successor Agency
Investment Policy
June 3, 2013
aggregate investment in medium term notes shall not exceed 30% of the Agency's total
portfolio.
5. Neqotiable Certificates of Deposit with a maturity not exceeding five years from the date
of trade settlement, in state or nationally chartered banks or savings and loans that are
insured by the FDIC, subject to the limitations of California Government Code Section
53638. If issuers have senior debt outstanding, it shall be rated at least AA or the
equivalent by a NRSRO at the time of purchase.
Non-negotiable Certificates of Deposit and savings deposits with a maturity not
exceeding 180 days from the date of trade settlement, in state or nationally chartered
banks or savings and loans with a California branch office that are insured by the FDIC.
Time Certificates of Deposit exceeding the FDIC insured amount shall be secured
pursuant to California Government Code Section 53652.
In addition, per the conditions of California Government Code Section 53601.8 and
notwithstanding Section 53601, the Agency may invest in certificates of deposit at a
commercial bank, savings bank, savings and loan association, or credit union that uses
a private sector entity to assist in the placement of certificates of deposit. The
aggregate amount invested in any type of certificate of deposit shall not exceed 30% of
the Agency's total portfolio.
6. Special Assessment District Obliqations issued by the former San Rafael
Redevelopment Agency as Limited Obligation Improvement Bonds related to special
assessment districts and special tax districts. Investment in such obligations requires
the approval of the Agency and maturities may extend to 30 years from the date of trade
settlement.
7. Prime Commercial Paper with a maturity not exceeding 270 days from the date of
purchase with the highest ranking or of the highest letter and number rating as provided
for by a NRSRO. The entity that issues the commercial paper shall meet all of the
following conditions in either sub -paragraph A. or sub -paragraph B. below:
A. The entity shall (1) be organized and operating in the United States as a
general corporation, (2) have total assets in excess of five hundred million
dollars ($500,000,000) and (3) Have debt other than commercial paper, if
any, that is rated "A" or higher by a NRSRO.
B. The entity shall (1) be organized within the United States as a special
purpose corporation, trust, or limited liability company. (2) have program wide
credit enhancements, including, but not limited to, over collateralization,
letters of credit or surety bond and (3) have commercial paper that is rated
"A-1" or higher, or the equivalent, by a NRSRO.
Purchases of eligible commercial paper may not represent more than 10% of the
outstanding commercial paper of any single corporate issuer. No more than 10% of the
Agency's total portfolio or $1,000,000 whichever is less, shall be invested in the
commercial paper of any one issuer, and the aggregate investment in commercial paper
shall not exceed 25% of the Agency's total portfolio.
The San Rafael Successor Agency
Investment Policy
June 3.2O13
8. Biqibka Bankers Acceptances issued by FDIC insured commercial b8nka, rated at least
A,1 or the equivalent by o NR8RO with maturities not exceeding 180 days from the date
of purchase. If issuers have senior debt outotanding, it shall be rated at least or the
equivalent by o NR8R[}. No more than $2.000.000 shall be invested in banker's
uuueoLenoea of any one commercial bank, and the aggregate investment in banker's
acceptances shall not exceed 4D96ofthe Agency's total portfolio.
8. Repurchase Aqreements with e final termination date not exceeding one year
collateralized by U.S. Treasury obligations, Federal Agency necuhUao. or Federal
Instrumentality securities listed in items 1. 2 and 3 above with the maturity of the
collateral not exceeding five years. For the purpose of this section, the term collateral
shall mean purchased securities under the terms of the Agency's approved Master
Repurchase Agreement. The purchased securities shall have m minimum market value
including accrued interest of 10296 of the dollar value of the funds borrowed. Collateral
ahg|| be held in the Agency's custodian bmnk, as safekeeping agent, and the market
value of the collateral securities shall be marked -to -the -market daily.
Repurchase Agreements shall be entered into only with broker/dealers who are
recognized as Primary Dealers by the Federal Reserve Bank of New York orhave o
primary dealer within their holding company structure. Primary Dealers approved as
Repurchase Agreement counterparties shall have eshort-term credit rating nfatleast A-
1 or the equivalent and a long-term credit rating of at least A or the equivalent.
Repurchase agreement counterparties shall execute an Agency approved Master
Repurchase Agreement with the Agency. The Treasurer shall maintain a copy of the
Agency's approved Master Repurchase Agreement along with a list of the
broker/dealers who have executed same.
10. State of California's Luum| /\qenoy Investment Fund (LA|F), pursuant to California
Government Code Section 164 29.1.
11. Monev Market Funds registered under the Investment Company Act of 1940 that (1) are
"no-load" (meaning no commission or fee shall be charged on purchases or sales of
shares); /2\ have o constant daily net asset value per share of $1.00; /3\ invest only in
the securities and obligations authorized in this Policy and (4) have 8 rating of at least
AAA or the equivalent by at least two NR8ROe. The aggregate investment in money
market funds shall not exceed 1O96Ofthe Agency's total portfolio.
It is the intent of the Agency that the foregoing list of authorized securities and tr@nSGCtiODG
is strictly interpreted. Any deviation from this list must be p[eapprOVed by FeSO|UdOD Of the
City Council, acting 3SGoverning Board 0fthe Successor Agency.
PORTFOLIO MATURITIES AND LIQUIDITY
TO the extent possible, investments ShG|| be matched with anticipated cash OVVV
requirements and hOOvvO fUtUP8 liabilities. The Agency will not invest in securities maturing
more than five years from the date Of purchase, uD|eBG the City COUOCi|' acting as
The San Rafael Successor Agency
Investment Policy
June 3, 2013
Governing Board of the Successor Agency has by resolution granted authority to make
such an inmso[nnard at least three months prior to the dote of investment.
SELECTION OF BROKER/DEALERS
The Treasurer shall maintain a list ofbrVker/deo|ere authorized for investment purpoeee,
and it aheU be the policy of the Agency to purchase securities only from those authorized
firms. To be e|igib|e, a firm must be licensed by the State of California as a broker/dealer
asdefined inSection 25OO4of the California Corporations Code, and:
1. be recognized as a Primary Dealer by the Federal Reserve Bank of New York or have a
primary dealer within its holding company structure, or
2. report voluntarily {othe Federal Reserve Bank ofNew York, or
3. qualify under Securities and Exchange Commission (SEC) Rule 15c3-1 /Uniform Net
Capital Rule).
Each authorized broker/dea|arShaU be required to submit and annually update on Agency
approved Broker/Dealer Information Request form which includes the firm's most namen[
financial statements. The Treasurer shall maintain a list of the broker/dealers that have
been approved bythe Agency, along with each firm's most recent broker/dealer Information
Request form.
In the event that gnexternal investment advisor isnot used inthe process of recommending
o particular transaction in the Agency's portfo|io, authorized broker/dealers shall attest in
writing that they have received a copy of this policy.
The Agency may purchase commercial paper from direct issuers even though they one not
on the approved broker/dealer list as long as they meet the criteria outlined in Item 5 of the
Authorized Securities and Transactions section ofthis Policy.
COMPETITIVE TRANSACTIONS
Each investment transaction shall be
broker/dealers. At least three broker/dealersshall be contacted for each transaction and
their bid and offering prices shall be recorded.
competitively transacted with authorized
If the Agency is offered 8 security for which there is DO other readily 8v@U@bke competitive
offering, the Treasurer will document quotations for comparable or alternative securities.
SELECTION OF BANKS
The Treasurer shall D18iDt@iO a list Vfbanks that are approved to provide banking services
for the Agency. TObSeligible for authorization, 8bank must be8member Ofthe FDIC and
shall qualify as a depository of public funds in the State of California as defined in California
Government Code Section 5363O.5.
The San Rafael Successor Agency
Investment Policy
June 3, 2013
SAFEKEEPING AND CUSTODY
The Treasurer shall select one or more banks to provide safekeeping and custodial services
for the Agency, in accordance with the provisions of Section 53608 of the California
Government Code. A Safekeeping Agreement approved by the Agency shall be executed
with each custodian bank prior to utilizing that bank's safekeeping services. Custodian
banks will be selected on the basis of their ability to provide services for the Agency's
account and the competitive pricing of their safekeeping related services.
The purchase and sale of securities and repurchase agreement transactions shall be settled
on a delivery versus payment basis. All securities shall be perfected in the name of the
Agency. Sufficient evidence to title shall be consistent with modern investment, banking
and commercial practices.
All investment securities purchased by the Agency will be delivered by either book entry or
physical delivery and will be held in third -party safekeeping by an Agency approved
custodian bank, its correspondent bank or its Depository Trust Company (DTC) participant
account.
The Agency's custodian shall be required to furnish the Agency a list of holdings on at least
a monthly basis and safekeeping receipts or customer confirmations shall be issued for
each transaction.
PORTFOLIO PERFORMANCE
The investment portfolio shall be designed to attain a market rate of return throughout
budgetary and economic cycles, taking into account prevailing market conditions, risk
constraints for eligible securities, and cash flow requirements. The performance of the
Agency's investments shall be compared to the average yield on the U.S. Treasury security
that most closely corresponds to the portfolio's actual weighted average effective maturity.
When comparing the performance of the Agency's portfolio, its rate of return will be
computed net of all fees and expenses.
On a quarterly basis, the Treasurer shall submit to the City Council, acting as Governing
Board of the Successor Agency a report of the investment earnings and performance
results of the Agency's investment portfolio. The report shall include the following
information:
The San Rafael Successor Agency
Investment Policy
June 3.2O13
1. Investment tvpe, issuer, date Of purchase, purchase price, d8[S Of Ol@tUrhv, par value,
current rete ofinterest and dollar amount invested in all eeouhtieu, and investments and
monies held bythe Agency;
2. Adencripdon ofthe funds, investments and programs;
3. A market value as of the date of the report (or the most recent valuation as to aaee[e not
valued monthly) and the source Ofthe valuation;
4. C)vena|| portfolio yield based on historical cost;
5. Weighted average final maturity and weighted average effective maturity;
0. Aetatenoent ofcompliance with this Policy or an explanation for not -compliance;
7. A description of any of the Agency's funds, investments or prVgn@rna that one under the
management of contracted parties, including lending programs; and
8. A statement of the ability to meet expenditure requirements for six monthe, as well as an
explanation ofwhy money will not beavailable ifthat iothe case.
POLICY REVIEW
This |nveo[nnerd Policy ehGU be reviewed and approved by the City Counci|, acting as
Governing Board of the Successor Agency annually to ensure its consistency with the
overall objectives o[principal, |iquidUv, yield and diversification and its relevance iocurrent
law and economic trends. Any amendments tothis Investment Policy shall beforwarded to
the Agency for approval.
vuvwanagemen Services- W»rkFleTioanm, vVorkFle'Laah Management and Treasunw 2013
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